000402.SZ WACC - Weighted Average Cost of Capital

The WACC of Financial Street Holdings Co Ltd (000402.SZ) is 3.9%.

The Cost of Equity of Financial Street Holdings Co Ltd (000402.SZ) is 8.60%.

The Cost of Debt of Financial Street Holdings Co Ltd (000402.SZ) is 5.00%.

	Range	Selected
Cost of equity	6.60% - 10.60%	8.60%
Tax rate	28.10% - 37.70%	32.90%
Cost of debt	5.00% - 5.00%	5.00%
WACC	3.9% - 3.8%	3.9%

WACC

000402.SZ WACC calculation

Category	Low	High

Long-term bond rate	2.7%	3.2%
Equity market risk premium	6.1%	7.1%
Adjusted beta	0.65	0.97

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.60%	10.60%

Tax rate	28.10%	37.70%
Debt/Equity ratio	9.28	9.28
Cost of debt	5.00%	5.00%

After-tax WACC	3.9%	3.8%


Selected WACC	3.9%

000402.SZ's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for 000402.SZ:

cost_of_equity (8.60%) = risk_free_rate (2.95%) + equity_risk_premium (6.60%) * adjusted_beta (0.65) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.